STATE BOARD OF EXAMINERS
MINUTES – Emergency Meeting
March 4, 2010 -- 2:00 p.m.
Governor's Office, 2nd Floor Capitol Building
An emergency meeting of the State Board of Examiners was called to order pursuant to Idaho Code §67-2343(2) and by the order of the chair.
The following board members were present: Governor C.L. “Butch” Otter, Secretary of State Ben Ysursa, and Attorney General Lawrence Wasden by telephone. Controller Donna M. Jones, Secretary to the State Board of Examiners recorded the proceedings of the meeting.
Ms. Jones introduced the Regular agenda item.
1. Idaho State Tax Commission - Approved transfer of $30 million.
Request pursuant to Idaho Code 63-3067(2) for an immediate transfer of funds from the general fund to the state refund fund in the amount of $45 million.
Discussion: Mr. Hammon read Idaho Code §67-2343(2), stating that special meetings can be held without prior notice provided an emergency exists, and that the reason for the emergency is stated at the outset of the meeting. He noted that the purpose of the emergency session today is the fund balance of zero in the State Tax Commission’s Refund Account. Having the account at zero results in the Tax Commission being unable to issue refunds that are due to taxpayers. On Friday, February 25th, the Tax Commission notified the Board of Examiners that there may be an issue with the refund account. On Sunday evening, February 28, the account had $10.2 million. At the end of January, it had $82.9 million. Between the end of January and the end of February, the account had paid out over $90 million in refunds and received only $17.2 million in deposits. Between February 28 and March 3rd, that number had gone to zero. The Tax Commission has estimated that they will need $45 million to reach the end of the fiscal year. The Division of Financial Management spent some time with the Tax Commission staff and worked out what the real need is, based on historical patterns. DFM recommended approving the Tax Commission’s request at a level of $30 million. DFM believes that $30 million will allow the Tax Commission to cash flow the account without delaying refunds, which will move them successfully into April, the largest tax collection month. It should be noted that at the end of the fiscal year anything in the account in excess of $1.5 million is reverted back to the General Fund. Last year the Board approved to move $20 million into this fund; $13 million was then reverted back at the end of the fiscal year.
Mr. Wasden commented that there is a statutory provision for the Tax Commission to take this action. He asked which fund would this come from.
Mr. Hammon responded that the request is that the transfer would come from the General Fund. That is the same avenue that the Board of Examiners used last year.
Mr. Brian Kane explained that Idaho Code §63-3067 directs that the Board of Examiners has the authority to transfer from the Tax Collections Account into the Tax Refund Account. After speaking with the Controller’s Office regarding the accounts, it has been determined that the code has not caught up to the accounts for everything. It does go from the General Fund into the Tax Refund Account at this point.
Gov. Otter asked about the source of the funds the Board would move today. He asked what other accounts do they have where sales tax or income tax would come in, and not go into the General Fund.
Mr. Hammon explained that when the receipts come in, 20% goes into the Refund Account and 80% goes into the Collections Account and then the Collections Account puts it into the General Fund. The source is ultimately the General Fund.
Mr. Ysursa asked if the Tax Commission had any comments on the $30 million figure instead of their requested $45 million.
Mr. Mark Poppler from the Tax Commission noted that the $30 million would be a huge improvement over what they have right now. It would mean that they would possibly intentionally be slowing the process down even further by several days. Even with $30 million the fund is still going to be close to zero many times over the next couple of months until the April revenues all come in.
Gov. Otter asked what Mr. Poppler meant by “slowing the process”.
Mr. Poppler stated that they would purposely add an extra day or two to make sure that they are not sending them out just as fast as the system would like to send them out.
Gov. Otter noted that they have made a promise and used advertising to convey that those who do electronic filings will get their returns more quickly.
Mr. Poppler stated that right now on electronic files they are looking at about 12 days for an individual to see their return. For those filing their taxes on paper, it is taking 10 weeks right now and will be closer to 6 weeks soon.
Mr. Hammon explained that right now the average electronic is taking 10 days to receive a refund. In order to balance that and make sure they do not hit zero, they anticipate adding 2 days to that process so it would be 12 days instead of 10 so they can check the balance in the account every morning.
Mr. Poppler said they are sending refund checks out every day except the weekends.
Gov. Otter asked Mr. Poppler if the $30 million would accomplish the same thing as the $45 million requested.
Mr. Poppler responded that the $30 million will alleviate most of the problem, and they will deal with the other shortfalls by slowing things down even further.
Gov. Otter said that last year they transferred $20 million and now this year will be $30 million. He asked if that is reflective of the tax collections.
Mr. Hammon responded that it is. He said that last year at the end of March the fund hit a balance of $12,000. But in January 2009, they issued $12.9 million in refunds. In January of 2010 $16.7 million was issued. In February 2009 they issued $80 million and in February of 2010 they have issued $90 million. He stated that the State will get to the same place as last year; it is just that it is happening earlier this year, which is the reason for the emergency transfer.
Mr. Wasden asked that DFM and the Tax Commission keep the Board informed on the status of the account in case the issue needs to be addressed again between now and June 30th.
Resolution: Mr. Ysursa moved that the Board of Examiners authorize the transfer of $30 million from the General Fund to the Tax Collections Account and from the Tax Collections Account to the Refund Account. Mr. Wasden seconded the motion. The motion carried on a unanimous voice vote.
There being no further business before the board and on motion duly made and seconded, THE MEETING OF THE STATE BOARD OF EXAMINERS WAS ADJOURNED at 2:23 p.m.
__________/s/ C.L. “Butch” Otter__________________/s/ Donna M. Jones ____________
C.L. “Butch” Otter, Chairman of the Board and
Governor of the State of Idaho
Donna M. Jones, Secretary of the Board and
Idaho State Controller